HomeMy WebLinkAboutBUDGET & FINANCE AGENDA 11-16-09Central Contra
BUDGET AND FINANCE COMMITTEE
Chair Lucey
Member Nejedly
Monday, November 16, 2009
3:00 p.m.
Third Floor Conference Room
5019 Imhoff Place
Martinez, California
INFORMATION FOR THE PUBLIC
ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA
District
BOARD OF DIRECTORS
JAMGBA. NfilliDLY
Prc.:'idem
MICHAfiI. R. Mcf./LL
Prcaidanl Yrn l'em
HAIiHANA U. HIX:XF,'%T
GIZRALD N. 1.UC'!iY
MARlO M. MGNfiSINf
PHONE: (925)118-9500
FAX: (925) 676-72!!
www.centralsan.org
Anyone wishing to address the Committee on an item listed on the agenda will be heard when the
Committee Chair calls for comments from the audience. The Chair may specify the number of minutes
each person will be permitted to speak based on the number of persons wishing to speak and the time
available. After the public has commented, the item is closed to further public comment and brought to the
Committee for discussion. There is no further comment permitted from the audience unless inviied by the
Committee.
ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA
In accordance with state law; the Committee is prohibited from discussing items not calendared on the
agenda. You may address the Committee on any items not listed on the agenda, and which are within their
jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be
referred to staff for action or calendared on a future agenda.
AGENDA REPORTS
Supporting materials on Committee agenda items are available for public review at [he Reception, 5019
Imhoff Place, Martinez. Reports or information relating [o agenda items distributed within 72 hours of the
meeting [o a majority of [he Committee are also available for public inspection a[ the Reception. During
the meeting, information and supporting materials are available in the Conference Room.
AMERICANS WITH DISABILITIES ACT
In accordance with the Americans With Disabilities Act and California Law, it is the policy of the Central
Contra Costa Sanitary District to after its public meetings in a manner that is readily accessible to
everyone, including those with disabilities. If you are disabled and require special accommodations to
participate, please contact the Secretary of the District at least 48 hours in advance of the meeting at (925)
229-7303.
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Call Meeting to Order
Public Comments
Old Business
Claims Management
Budget and Finance Committee
November 16, 2009 l
Page 2
tea. Review new and outstanding claims
Reports and Announcements
a. LAIF Account for Bond Proceeds and New LAIF Limits
'b. Ten Year Plan Assumptions
'c. Comprehensive Annual Financial Report (CAFR)
Review Expenditures (Item 3.a. in Board Binder)
Adjournment
* Attachment
3.
Central Contra Costa Sanitary District
November 13, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: RANDALL MUSGRAVES, DIRECTOR OF ADMINISTRATION ® ~
FROM: STEPHANIE KING, PURCHASING & MATERIALS MANAGER SI-'
SUBJECT: OCCHICONE BILLING & BIDS
There was a concern brought up at the Nov. 2"d Budget & Finance Committee regarding
the timeliness of Occhicone's invoices. Staff has found that Occhicone did not submit
their invoices late. There is an internal process to receive, verify, and authorize
payment on invoices. This process took longer for the August bill, which is why both
August and September bills showed up on the same ledger. Staff has stated that
Occhicone has been very timely with their billing since addressing this issue with them
previously.
Additionally, the Committee asked when the landscaping and uniform contracts will be
competitively priced. Our goal is to award the landscape contract by the end of May
2010 and the uniform contract by the end of December 2010. Seeking competitive
quotes for uniforms is a much more complicated process.
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Central Contra Costa Sanitary District
November 13, 2009
TO: HONORABLE BOARD OF DIRECTORS
FROM: JAMES KELLY, GENERAL MANAGER ~~~~
SUBJECT: 10-YEAR FINANCIAL PLAN INFORMATION FOR THE 11/16/09 BOARD
BUDGET AND FINANCE COMMITTEE MEETING
Staff provides the Board Budget and Finance Committee data related to preparation of
the 10-Year Plan prior to preparation of the plan. Staff considers items such as
economic conditions, financial condition of the State, regulatory requirements, and
District programs and needs. Last year was challenging due to unprecedented
economic events, and the continued volatile economy impacts this year's process as
well.
Attached are bulleted summaries of Rate-Setting Rules of Thumb, and high-level
scenario assumptions staff plans to use to prepare the plan. Budget and Finance
Committee input is respectfully requested.
RATE SETTING "RULES OF THUMB"
Updated November 13, 2009
• A $1 per year rate increase to the SSC equals about $170,000 for the 2010-11 fiscal year.
The amount increases as our connections increase.
• Every $1.0 million dollars of change (up or down) to revenue or expense equates to
approximately $6 per year on the SSC.
• There are exceptions to the above rule due to reimbursement from Concord. An increase in
treatment plant projects costs and/or an increase to treatment plant O&M expenses nets to
only 70% of the total expense since Concord reimburses us the other 30% based on their
flow into our plant. (Example: $1.0 million more in treatment plant utility expense nets to
only $700,000 due to the Concord reimbursement.)
The Funds Required amount we calculate is the cash on hand, or Funds Available needed,
without any short-term borrowing, on July 1 of any given year to pay for all District
expenditures until the first installment of our SSC and property tax is posted to our account
by the County in mid-December. Based on cash flow analyses, the calculation is 32% of
the following year's O&M expenses plus 30% of the following year's Capital costs plus
100% of debt service.
• A small contingency amount is automatically built into this calculation since we only make
the first installment of debt service in September, but we use 100% of debt service in the
calculation.
• Regular annual increases will allow for smoothing of rates so long as funds available stay
above funds required. Raising rates each year is apay-as-you-go philosophy, and higher
annual rate increases can act as a sinking fund for future project costs. Some argue that
current customers are paying for future customer project enhancements. On the other
hand, project expense is less since there is no interest paid on borrowed funds.
• Another option is to sell bonds for one-time significant time-sensitive projects. The debt
service costs more in the long run due to the interest component, but helps smooth rates,
and allocates the project cost to future rate payers who benefit from the capital
improvement.
• The District has utilized a combination approach of pay-as-you-go and selective bond
financing for larger, long-lived projects.
• Due to the time value of money, larger increases in current years take advantage of
increased interest earnings. Using the 10-year plan scenarios, when we display small
increases in current years, we need larger increases in the future. Overall, if you total the
rate increases in the 10-year period, generally, the second option (larger increases in the
future) has collectively larger rate increases when comparing the two methods.
H:\General Manager's Directory\Board Documents\2009\RATE SETTING RULES OF THUMB.doc
CENTRAL CONTRA COSTA SANITARY DISTRICT
JANUARY 2010 BOARD FINANCIAL WORKSHOP
PRELIMINARY SCENARIO ASSUMPTIONS
November 16, 2009
Scenario Premise:
• Capital Project assumptions from November 12, 2009 workshop.
• $30 million in bond proceeds and associated debt repayment is included in the model.
(Refinancing the current 1996 debt issuance saves the District approximately $460,000/year
for five years and refinancing the 2002 debt issuance saves $60,000/year for 14 years of
remaining debt service.)
• Current economic assumptions and future year projections are reviewed and updated.
• The O&M cost-saving goal of $1.7 million for 2009-10 is included.
$15 - 17 rate increases with the goal of staying above funds required.
Revenue:
• Connection fee deferred connection collections pilot program assumptions are included.
• Assumptions for interest rates were lowered based on current information.
• The State borrowing of $1.0 million in property tax revenue is included in the model, along with
repayment of $1.1 million in 3 years. No property tax revenue growth is predicted through 2012-
13, and then 4%/year increases are assumed in future years. Our current tax base is slightly
higher than last year, before any reduction for State borrowing.
Expense/Expenditures/Debt:
• Capital Spending estimates from the November 12, 2009 Capital Board workshop
• Includes employee retirement assumptions from Department Directors' review, and expense
account assumption changes (such as utility cost fluctuations)
• Includes $1.7 million 2009-10 O&M cost-saving goal
• Salary vacancy of 3%, and benefit vacancy of 4% used in the model
• Retirement rates are actual known rates through the 2010-11 fiscal year. Staff is monitoring the
potential CCCERA policy changes. Two hot topics are de-pooling and the definition of what is
allowable in the final year of compensation. Policy changes could impact our unfunded liability
and annual rates.
GASB 45:
• Funds Available balances do not include the OPEB/GASB 45 funds either set aside, or deposited
into the PARS trust.
• The OPEB/GASB 45 contribution is assumed to be $6.5 million (_ $10 SSC) in the near-term, and
$6.0 in later years, including retiree premiums. The current actuarial evaluation is being
performed, so these estimates may change. Was $5.0 million last year.
Funds Required/Available:
• The Funds Required calculation remains the same: 32% of next year's O8M + 30% of next year's
Capital costs + 100% of Debt Service.
Funds Available are made up of Running Expense and Sewer Construction Fund cash and
investment accounts. Keeping Funds Available above Funds Required eliminates the need for
short-term borrowing for cash flaw
Other:
The State's budget deficit and deteriorating credit rating will impact future year assumptions.
Currently, only the 2009-10 Prop 1A borrowing of property tax is included. Staff is monitoring
State issues that can impact the District and other local governments.
^ FILENAME \p H:\General Manager's Directory\Board Documents\2009Wssumptions.doc^